U.S. oil output to soar to 26-year high in 2014

US oil production will jump 23 percent over the next two years to a quarter-century high by 2014, reducing demand for foreign supplies from the world’s largest oil importer, according to a new official forecast.

The government’s Energy Information Agency said that booming production from shale and other “tight oil” formations will push the country’s daily production to 7.92 million barrels a day from 6.43 million barrels a day in 2012.

Production last year already gained 780,000 barrels a day from 2011 thanks to surging production from fracking operations tapping shale resources in the North Dakota region, the EIA said in the report released Tuesday.

The continuing rise will by 2014 push US production to its highest level since 1988, closing in on the world’s leading producer Saudi Arabia, which puts out more than 10 million barrels a day, most of it exported.

The rise in production will be paralleled however by a fall in global oil prices, the EIA said: the price for the benchmark Brent crude, which averaged $112 a barrel last year, will drop to $105 on average this year and $99 in 2014.

The falling price is driven due to higher supplies on the market of both oil and gas, thanks to growing exploitation of previously inaccessible oil shale and other tight oil and gas formations.

The rise in the past few years of fracking — which involves using high pressure to collapse complex rock formations, along with horizontal drilling, to release the hydrocarbons — has been at the root of the production surge.